Pearson BTEC Level 4/5 HNC/D Diploma Travel and Tourism Management – level 4 : Role of Marketing in travel and Tourism
The role of marketing is to facilitate a common platform for participation of both the buyers and sellers. The alignment of marketing strategies with the functional strategy of the organisation is very important in order to get the maximum benefit out of the marketing and its related activities. Just like any other major sector, the travel and tourism sector also values the role of marketing in the organisational context. The various elements of marketing environment have direct impact on the business operation, and the business has the responsibility to fulfil the expectations of the customers through various strategic and tactical marketing decisions. This study will use the example of Thomson Holidays to examine various concepts of marketing. By using the examples of London Gatwick Airport and the Sheraton Hotel, different aspects of service industry marketing are also explained.
LO1. Understand the concepts and principles of marketing in the travel and tourism sector
P1.1 discuss the core concepts of marketing for the travel and tourism sector
In the last few years, the worldwide economy has been experiencing a mixed array of events. The 2008 debt crisis was followed by the latest Euro debt crisis, and at the same the developing nations experienced good time in terms of economic growth. The growth in the developing countries economy has given more number of consumers who spend freely towards lifestyle and travel related expenses. The consumer expenditure growth is the result of increasing disposable income in the developing economies. At the same time, the travel and tourism sector has also experienced development and the industry became more competitive. The growth has attracted a number of smaller players in the market, and the numbers of customers have also increased because of the overall effort from all the players present in the travel and tourism space. The products and services offered have now become more homogeneous and standardised, which were diverse in nature earlier to the economic growth. However the expenditure style of the customers in the developed world has gone down noticeably. Larger companies such as Thomson Holidays are coming up with improved marketing strategy so that they can entice a larger set of spenders. The marketing activities are more than just creating needs in the consumer’s mind. The bigger players in the travel and tourism sector are now moving more in the direction of a market oriented trade approaches. The role of marketing division has become superior with the need of customers becoming first priority followed by the need of market dynamism (Lumsdon, 1997). The marketing strategies in the travel and tourism space are in the process of aligning and reshaping their business strategies with the long term marketing objectives. Services offered in the form of vacation and tourism services can only be experienced by the customer at the first hand. This gives rise to the requirement of tighter regulation over value delivery to the consumers so that the customer satisfaction can become the ultimate goal of the business. The customers have got more choices in the travel operation space than ever. The increasing competition has forced the current and new players to come up with new and innovative ideas of tapping and retaining customers (Coltman, 1989).
P1.2 assess the impact of the marketing environment on individual travel and tourism businesses and tourist destinations
Marketing environment is perceived as a common platform for the interaction of all the responsible features of marketing accomplishments which are related to the business operation. It not only includes the business related elements but also the external elements, which are indirectly or directly affecting the activities of market and business.
Thomson Holidays is a London-based travel and tourism service provider which operates as a subsidiary of TUI Travel plc. The company has spread its existence in the form of the services it offers almost at every important destination across the globe. Frequent and drastic changes happening in every corner of tourist destinations make the company to realise its approach. The company also monitors the fluctuations in various fronts of the market. The changes taking place in the marketing environment has given the need of reshaping the company’s marketing activities by larger extent. While developing and introducing any new services or product, Thomson thinks about the marketing environment in terms of the potential impact it may have on the company’s long term approach. After the debt crisis and further economic problems across numerous economies, it has become very difficult to raise fresh capital in order to expand the business operation (Donovan & Henley, 2003). The problems related to customer trends and social factors face problems for the company which operates in the tourism space. The personal decisions about spending on vacations come from various related social factors such as family issues, importance of going on holidays and the economic condition of the country. In order to have a cordial existence, the relationship between business and society is important, and they are dependent upon each other.
The strategic and marketing machinery of Thomson Holidays work towards monitoring the following three types of marketing environment:
Macro environment: the company can hardly have any over these external elements. Any changes in the economic development, political scenario, and social scenarios trigger the need for business approach. The company should examine the viability of doing business in the countries which pose great change in the macro environment factors in the future.
Micro environment: It comprises business related internal factors. Any decisions taken by the higher management can have a long ranging impact business approaches. The factors matter a lot because these change the market outlook of the company. At the same time the company image can be greatly impacted due to the internal factors.
Market environment: the third component affects the entire business operation of Thomson Holidays. Various players in the market establish the market environment. Suppliers, customers, and all business related third parties are included in the market environment (Assael & Schnaars, 1990).
P1.3 discuss the factors affecting consumer motivation and demand in the travel and tourism sector
Marketing departments of the companies spend a lot of money and effort towards creating customer awareness and motivation in the market. The demand from customers determines the long term survival of the business. Thomson Holidays have to cater a number of customers coming from varied background and they come with their own set of expectations. The individualities among the customer base forces the operators in travel and tourism to make wise decisions in terms of marketing strategies and tactics. The consumer behaviour has historically dominated the market trend and decision making process of the players. However several other factors including social and economic elements present in the market determines the customer behaviour, and resultantly their demand and motivation. Buying decision is the single most important factor that decides the customer expenditure, and the decision is affected by the customer’s need of vacation and ability to spend on leisure. Pricing of the travel packages is imperative to be decided by the company keeping the cost and benefit structure in mind. Time availability is also crucial in determining the enthusiasms of the traveller. Personal choices arising from the health related issues in vacation are level of interest, family related issues, and guarantee of safety at the destination. Thomson Holidays tries to focus on the better value delivery in the form of service quality and assurance to the customers while they are on vacation. Motivation will be the resultant effect of smooth vacation services offered by the travel and tourism operator (Bearden, 2006). Every traveller comes with a minimum expectation of guaranteed service related experience, which is the duty of Thomson to fulfil. The company has identified a core concept of customer motivation and demand: better the traveling experience, more the chance of getting repeat customers. Hence the company tries to provide a well-structured approach with the pre-travel experience of the customers and try to match the same with post-travel service offering (Palmer & Cole, 1995).
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P1.4 analyse the principles of market segmentation and its uses in marketing planning
Effective and precisely defined market segmentation is very crucial for all kinds of business. The segmentation process should take into consider the following factors:
- The relevance of the segment: which means the customers must be present in the market to target.
- The marketer of the travel and tourism operator should be able to segment a clearly identifiable customer set, and the marketing activities must be consistent with its efforts.
- Target segments must be accessible enough in order to make the marketing efforts reach the desired set of buyers.
While targeting and outlining the target customer segment, the companies in travel and tourism sector use various criteria. Few of the criteria are behavioural, demographic, psychographic, life-cycle stage and geography. The following categories of segmentation are vastly used by Thomson Holidays:
Psychographic Segmentation: Like a number of other travel operators, Thomson Holidays use psychographic segmentation to ensure that the segmentation is perfectly catering to the company’s marketing needs. With this type of marketing approach, Thomson is segments its potential and existing travellers on the basis of personalities, lifestyle and individual perceptions. Thomson Holidays comes up with specially schemed travel and vacation packages for the target segments. For example, the company has introduced “Thomson Couple” offer to entice the newly wed and vacation searching couples who want to go for foreign vacation. Thomson tries to evaluate the service quality and the scope for improvement which can provide the company with better view and observation of the travellers.
Demographic Segmentation: the company tries to divide its customers into sections of travellers who come from various levels of income, age groups, gender, and lifecycle stage. Thomson identifies the customer behaviour and dissimilar traveller perceptions.
Geographic Segmentation: Thomson has identified its potential and existing customers on the basis of their geographical locations. The company tries to provide location specific services to its customers, which are relevant to those markets and customer perceptions (Cannon & Sc, 1992).
LO2. Understand the role of marketing as a management tool in travel and tourism
P2.1- Analyse the importance of strategic marketing planning for a selected travel and tourism business or tourist destination
Thomson Holiday uses various strategic marketing planning tools in order to enable the company think tank with a planned view towards future:
SWOT Analysis: SWOT analysis includes finding out Strength, Weakness, Opportunities, and Threats of a business operation. Thomson Holidays uses this strategic planning tool in order to do have a better view of marketing planning. This analysis helps in identifying the inside factors and outside factors of the business which are responsible for the long term survival of the company. It is helpful in identifying the company strengths. For example, Thomson provides better service offering and enjoys a good brand image. SWOT analysis gives a perspective of key issues resulting in threats to the business. Thomson identifies fee operation related glitches happening on the ground as its weakness, and the company must try to take immediate remedial actions to prevent those. The framework also identifies opportunities that can be perceived as enhancement zones and contemporary possibilities in the market. With threat analysis, Thomson gets to know the likelihood of business impact because of new entrants in the market (including several small players) and possible substitutions that may hamper the business.
Product lifecycle: by doing a product lifecycle analysis, strategic planning division of Thomson gets a clear picture of the products or service in the market. The tourism product goes through several stages: i) the exploration stage (this is helpful in getting a clear idea and researched view about the newly identified tourist location), ii) development stage (this stage includes developing various other factors related to the destination which make the place a complete tourist attraction), iii) stagnation (the destination has been covered by thousands of travellers and is now very famous to be explored by new tourists).
BCG matrix analysis: Boston matrix is helpful in realising the product potential and future growth possibilities. The services can be divided as cash cows (the services which generate high revenue for Thomson but they have least opportunity for future growth), stars (the services which generate high revenue for Thomson with clear opportunity for future growth), dogs (the services which neither generate high revenue nor have any opportunity for future growth), and question marks (new services of the company which may have ambiguous prospect).
Ansoff matrix: Ansoff matrix is a helpful tool in outlining the growth prospective of bot the services of company and the market in which they operate. The choice of market penetration strategies, service diversification, market development and product development are examined and applied for the long term approach (Adcock, Halborg, & Ross, 2001).
P2.2-Discuss the relevance of marketing research and market information to managers in the travel and tourism sector
It is vital to have the usage of marketing research with the help of market information in the competitive environment of business operation. Market research has become very essential to obtain vital market trends and practise those towards suitable strategic judgement making. The habit of market research has been extensively used in numerous sectors including academics, business, and medicine. Market research is useful in discovering the unknown evidences and examining the past trends in order to forecast upcoming trend. The present market trend is promising in the travel and tourism sector. Because of the increase in the number of potential travellers in the developing economy, there has an upward trend of number of customers. The concepts of short trips around the globe are also becoming more famous. The hectic lifestyle of newer generation is facing a variety of problems in balancing out their personal and professional lives. Hence the need of vacation has become very essential to continue work with a revitalised mind. There is a new set of customers known as baby boomers who have enough availably of disposable income and they want to spend the money for pleasure and recreation. With the increase in travellers, the numbers of divergent travellers have also increased who come from difference background and mind sets. This trend has made the consumer information more complex and the requirement of consumer behaviour more interesting. When the prevailing market information is processed systematically, it can be useful for making strategic decision in both organisational and marketing context. Various strategic frameworks use the market information to devise the effective approach towards planning (Enis, 1980).
P2.3 – Assess the influence of marketing on society
Marketing activities basically includes a number of administration procedures with an outlook of recognising and meeting the customer expectations. The first duty of marketer is to identify the customer needs and then to plan the action plans in order to satisfy those needs. Marketing activities are not limited to the business operation purpose; the applicability of marketing efforts is stretched to the common lives of people. The potential impact of marketing efforts can be positive and negative at the same time. A number of marketing activities such as advertising, sales promotion, direct marketing, branding, and public relations are also responsible to have society oriented accountability. Advertisements face condemnation because of the way they are executed. Socially unacceptable promotion processes and advertisement contents often get carried away in the process of delivering an out of the box message to the mass market. The travel and tourism companies face disapproval in their promotional activities because of their mere attempt of attracting travellers and not aligning the necessary social norms. A number of travel operators have faced the blame of creating false need of vacation among the people. The relationship between customer’s perspective towards vacation and the false impression created by the travel operators need to be examined. However the balance between ethical facet of marketing and assertiveness must be maintained to give fair message to the society (Kotler & Armstrong, 2010).
LO3. To understand the role of the marketing mix in the travel and tourism sector
P3.1 discuss issues in the product, price and place elements of the marketing mix
The following elements of marketing mix represent those of London Gatwick Airport:
Product: The airport is second largest international airport in London. It has two operating terminals and single runway. The service provided by the airport if point to point flight services between various European destinations. It serves both individual passengers and cargo transports. Important factors for the Gatwick airport are length of runway, landing facility, and terminal capacity.
Price: Mostly the pricing strategies are offered uniquely to various carriers and travel operators. The main price control is with the government authority that fixes the regulations and provides very little scope of flexibility to the airport to play with pricing. The airport tries to compensate the pricing drawbacks with better quality in the service offering.
Place: The airport provides both the tour and travel operators as well as the individual customers with online access of timetable and airport related information. The bigger customers such as Thomas Cook, Thomson Holidays, etc are provided with enough space to operate seamlessly. The airport location is strategically placed in London to facilities more customers with airport services (Kotler & Armstrong, 2010; Armstrong & Schultz, 1993).
P3.2- assess the importance of service sector mix elements to the travel sector
Service is impalpable and it is tough to judge the effectiveness without using it. It is difficult to standardise the service because of the customer’s individualities are involved. It is also not possible to give the services a form of inventory. The process of consumption and delivering a service occurs simultaneously with its production process.
The following additional four Ps of marketing are present in travel services:
People: London Gatwick Airport should be very careful about taking care of its employees, as they are responsible in generating an inspiring atmosphere in the service delivery process. If the employees are treated well and provided with ample amount of instruments required for serving customers, the impact will be on customer satisfaction and on the company’s overall image. The tour operators and regular flight travellers should be given equal importance in the airport.
Programming: Service marketing activities of the London Gatwick Airport are lined up with the company’s long term goal through various programs which are aimed at boosting the company’s goal.
Partnership: It is imperative for an airport operating authority to look out for partners and strengthen the relationship with various stakeholders in the value chain of the company. The Gatwick Airport has maintained a good relationship with the big tour and travel operators. It helps in boosting the airport’s image in both the individual travellers and the business customers. More over the partnership is also extended towards the cargo service providers and other bigger partners.
Packaging: for an airport, the concept of packaging is the overall treatment of customers. The quality in packaging comes when the airport extends its support towards providing holistic services to the travellers (both inbound and outbound) in terms of helping them out with various amenities (Witt & Moutinho, 1994).
P3.3 apply the concept of the total tourism product to an individual tourism business – London Gatwick airport
Total tourism product (TTP) is intended to provide the customers or travellers with every single requirement while they are on the go. The product is a mix of all the necessary elements which may be required by the traveller. It spans from providing all the travel facilities along with lodging and boarding services. The entire facilities are put together and given the form of a single product. By providing every requirement in one bundle, the tourists also face lesser complexities in finding out the requirements at the travel destinations. The role of Gatwick is to promote the total tourism product and help the companies around the locality to gain from the overall product package. The airport authority has extended their support towards the local tourism government authority and in collaboration with the tour operations they have been active in promoting the concept of total tourism. Moreover the airport authority has played a role of an interface between a numbers of organisations who have to play their respective roles in taking the total tourism product concept higher. The airport as a standalone organisation has also attired a lot of travellers to choose the British airport facility and British travel operators over other European airports (Palmer & Bejou, 1995).
LO4. Be able to use the promotional mix in travel and tourism
P4.1 Assess the integrated nature and role of the promotional mix
Promotional mix includes various tools of marketing which work towards promoting the organisation’s brand image in order to achieve the overall goal of the firm. In service industries the role of promotional mix is very crucial. Companies in the hotel industries use the promotional mix to attract and retain customers. The usage of promotional mix can also be extended towards boosting the perception of service quality and complete brand image of the hotels.
The promotion mix has broadly the following two components:
Basic Components: Basic components are in the form of traditional way of promotion such as advertisement, personal calling, public relations, and regular sales promotion. Advertisement is the most effective and costliest medium of promoting the products and services. Public relation included the attempts taken by the organisation in promoting its brand image through news coverage, media presence, and public acquaintance.
Direct marketing: this is more flexible component of the promotional mix. Hotels use direct marketing channels to promote various offers which need immediate customer attention. The applicability of direct marketing is very much dependent on the product life cycle. If the product is not responding well, then direct marketing efforts will not be effective. However direct marketing is able to provide the opportunity in offering personal touch to service. The positive side of offering a direct touch is to be able to provide a two way communication platform with the customers.
Though the two approaches have their own limitations, the hotel must be careful in using an amalgamation of the both to achieve the effective result (Laws, 1991; Jefferson & Lickorish, 1991).
P4.2 Plan and justify an integrated promotional campaign for the Sheraton hotel
The basic approach towards promoting the Sheraton Hotel should an amalgamated strategy. The promotion must have a balancing approach of both direct and basic promotional components.
The following steps can be taken towards revamping the image of the hotel through promoting:
- As the first and foremost step, the Sheraton Hotel must formulate a new brand theme which should give message of revamp to the market. The entire promotion exercises should revolve around the new brand promotion theme.
- The reception counters must be decorated and designed with ample amount of available accommodation facilities details. The counter should be given a more sophisticated touch with keeping the hotel’s brand value and organisational vision in mind. Good looking images of hotel interiors should be displayed which must not provide any trifle to the audience.
- Steps must be taken towards making the members of the hotel staff more knowledgeable about the hotel’s inherent values and facilities.
- Proper channels of advertising through newspapers (preferably premium newspapers), television channels (travel and lifestyle channels), and radio stations should be used. Usage of outdoor media, print media and digital media should be given more encouragement.
- The Sheraton hotel should take initiatives toward revamping its relationship with trip advisors and tour operators, who possess immense influential power over the tourists.
The Sheraton can use the benefit of online promotion as well. It has to be proactive in updating the social network handles and provide more interesting information through the company website (Morgan & Pritchard, 1998).
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The overall situation of travel and tourism industry, including hotel industry and airport operation, is promising and competitive at the same time. The study has examined various facets of marketing using Thomson Holidays as the primary example. The role of marketing stretches from the organisation, to the sector and finally it impacts the society. The good and bad impact of marketing activities affects the organisational strategy and the overall image of the service sector. The travel and tourism sector uses various tools of traditional marketing strategy and marketing mix to exercise the organisational marketing approach. Role of promotional strategies is also influential in affecting the overall organisational image. It is vital to understand the applicability of marketing strategies in order to survive in the increasing competitive travel and tourism sector.
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